4187440 Canada Inc. v. Physio Clinic Ltd., (2014) 348 N.S.R.(2d) 30 (SC)

• Judge: Rosinski, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 04, 2014
• Jurisdiction: Nova Scotia
• Citations: (2014), 348 N.S.R.(2d) 30 (SC);2014 NSSC 214

4187440 Can. v. Physio Clinic (2014), 348 N.S.R.(2d) 30 (SC);

      1100 A.P.R. 30

MLB headnote and full text

Temp. Cite: [2014] N.S.R.(2d) TBEd. JL.033

4187440 Canada Inc. (plaintiff) v. The Physio Clinic Limited, carrying on business as The Physio Clinic and Woodlawn Physio Clinic; Michael D. Sutton; and M.D. Sutton Holdings Limited (defendants)

(Hfx. No. 363344; 2014 NSSC 214)

Indexed As: 4187440 Canada Inc. v. Physio Clinic Ltd.

Nova Scotia Supreme Court

Rosinski, J.

July 10, 2014.

Summary:

The plaintiff landlord alleged that the defendant Physio Clinic Ltd. (TPL) breached the parties' lease by vacating the premises before the termination date. It claimed that the defendant Sutton, the director of TPL, was the "controlling mind" of the corporate defendants, and that Sutton and Sutton Holdings Ltd. assisted TPL to breach its obligations under the lease. The position of TPL was that it had cause to vacate the premises. Sutton and Sutton Holdings Ltd. moved for summary judgment on evidence, under rule 13.04. They argued that none of the pleaded causes of action (the tort of conspiracy, breach of the Assignments and Preferences Act/Statute of Elizabeth, and intentional interference with economic relations) raised a genuine issue for trial.

The Nova Scotia Supreme Court granted summary judgment. Regarding Sutton and Sutton Holdings, the statement of claim failed to raise a genuine issue for trial.

Company Law - Topic 310

Nature of corporations - Lifting the corporate veil - General - [See third Practice - Topic 5719 ].

Fraud and Misrepresentation - Topic 1454

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Preference to defeat or prefer creditors - [See second Practice - Topic 5719 ].

Fraud and Misrepresentation - Topic 1501

Fraudulent conveyances and preferences - Sale or transfer by debtor to third parties - General - [See second Practice - Topic 5719 ].

Landlord and Tenant - Topic 2821

The lease - Breach by tenant - General - The plaintiff landlord alleged that the defendant Physio Clinic Ltd. (TPL) breached the parties' lease by vacating the premises before the termination date - It claimed that the defendant Sutton (director of TPL) was the "controlling mind" of the corporate defendants, and that Sutton and Sutton Holdings Ltd. assisted TPL to breach its obligations under the lease - The position of TPL was that it had cause to vacate the premises - Sutton and Sutton Holdings Ltd. moved for summary judgment on evidence, under rule 13.04 - They argued that none of the pleaded causes of action (the tort of conspiracy, breach of the Assignments and Preferences Act/Statute of Elizabeth, and intentional interference with economic relations), raised a genuine issue for trial - The Nova Scotia Supreme Court granted summary judgment, removing Sutton and Sutton Holdings as defendants - Regarding those defendants, the statement of claim failed to raise a genuine issue for trial in so far as the pleaded causes of action were concerned.

Practice - Topic 5710

Judgments and orders - Summary judgments - Evidence - The Nova Scotia Supreme Court summarized the analysis required on a motion for summary judgment on evidence, pursuant to rule 13.04 - See paragraphs 29 to 33.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff landlord sought to hold an individual defendant (Sutton) and Sutton Holdings Ltd. personally liable for the wrongful actions of the defendant corporations, including TPL (the tenant), either by way of agency or as an alter ego/ "controlling mind" - Sutton was a director, president and recognized agent for TPL - Sutton and Sutton Holdings claimed to have no involvement with the pleaded causes of action, including the tort of conspiracy, and moved for summary judgment on evidence (rule 13.04) - The Nova Scotia Supreme Court allowed the motion - In relation to the conspiracy allegation, the Court concluded that there was no material fact in dispute regarding the pleaded defence, and that the plaintiff's claims against Sutton and Sutton Holdings had no real chance of success - There was "not a shred of direct evidence" to support the allegation that the defendants agreed and combined to act unlawfully, and this was not a case where the Court should draw such an inference - See paragraphs 52 to 62.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff landlord sought to hold the individual defendant (Sutton) and Sutton Holdings Ltd. personally liable for the wrongful actions of the defendant corporations, including TPL (the tenant), either by way of agency or as an alter ego/ "controlling mind" - Sutton was a director, president and recognized agent for TPL - Sutton and Sutton Holdings claimed to have no involvement with the pleaded causes of action, including the allegations underlying the Assignments and Preferences Act, and the Statute of Elizabeth - The Nova Scotia Supreme Court granted summary judgment in favour of the defendants on those causes of action, under rule 13.04 - There was no direct evidence that TPL was insolvent at the relevant times - There was no direct evidence of any transfer of property; nor that if such transfer could be inferred, that it was for the purpose of delaying, hindering or prejudicing creditors - The Court concluded that there was no material fact in issue at stage one of the analysis - Moreover, after an examination of the defendants' and plaintiff's evidence on the motion, including the agency and piercing the corporate veil aspects, the Court found that the plaintiff had not established its claim against Sutton and Sutton Holdings as having "a real chance of success" - See paragraphs 63 to 77.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff landlord sought to hold the individual defendant (Sutton) and Sutton Holdings Ltd. personally liable for the wrongful actions of the defendant corporations, including TPL (the tenant), either by way of agency or as an alter ego/ "controlling mind" - Sutton was a director, president and recognized agent for TPL - Sutton and Sutton Holdings claimed to have no involvement with the pleaded causes of action, including intentional interference with economic relations - The plaintiff alleged that the defendants unlawfully interfered with TPL's obligations under the lease with full knowledge of those obligations, and that this was intended to and did in fact result in a financial loss to the plaintiff - The Nova Scotia Supreme Court granted summary judgment on evidence under rule 13.04, in favour of Sutton and Sutton Holdings - There was no direct evidence that Sutton or Sutton Holdings unlawfully interfered with the contractual relationship between the plaintiff and TPL - There was no direct evidence that either by way of agency or under the doctrine of "piercing the corporate veil" that Sutton could be personally liable for any wrongs of Sutton Holdings or TPL - There was no material fact in dispute at stage one of the analysis - Moreover, the plaintiff had failed to show its claim had a reasonable chance of success - See paragraphs 78 to 85.

Torts - Topic 5099

Interference with economic relations - Conspiracy - Evidence and proof - [See first Practice - Topic 5719 ].

Cases Noticed:

Symington v. Halifax (Regional Municipality) et al. (2013), 338 N.S.R.(2d) 321; 1071 A.P.R. 321; 2013 NSCA 152, refd to. [para. 27].

Hiltz v. 2420188 Nova Scotia Ltd. et al. (2011), 307 N.S.R.(2d) 89; 975 A.P.R. 89; 2011 NSCA 74, refd to. [para. 31].

MacNeil v. Bethune et al. (2006), 241 N.S.R.(2d) 1; 767 A.P.R. 1; 2006 NSCA 21, refd to. [para. 31].

United Gulf Developments Ltd. et al. v. Iskandar et al. (2004), 222 N.S.R.(2d) 137; 701 A.P.R. 137; 2004 NSCA 35, refd to. [para. 36].

Globex Foreign Exchange Corp. v. Launt et al. (2011), 306 N.S.R.(2d) 96; 968 A.P.R. 96; 2011 NSCA 67, refd to. [para. 40].

Dumbrell v. Regional Group of Companies Inc. et al. (2007), 220 O.A.C. 64; 85 O.R.(3d) 616; 2007 ONCA 59, refd to. [para. 46].

Cherubini Metal Works Ltd. v. Nova Scotia (Attorney General) et al. (2009), 285 N.S.R.(2d) 255; 905 A.P.R. 255; 2009 NSSC 386, varied in part (2011), 302 N.S.R.(2d) 367; 955 A.P.R. 367; 2011 NSCA 43, refd to. [para. 52].

Lameman et al. v. Canada (Attorney General) et al., [2008] 1 S.C.R. 372; 372 N.R. 239; 429 A.R. 26; 421 W.A.C. 26; 2008 SCC 14, refd to. [para. 54].

MacArthur (Bankrupt), Re (2013), 330 N.S.R.(2d) 288; 1046 A.P.R. 288; 2013 NSSC 157 (Registrar), refd to. [para. 63].

Okoro v. Human Rights Commission (N.S.) et al., [2006] N.S.R.(2d) Uned. 100; 2006 NSSC 257, refd to. [para. 88].

National Bank Financial Ltd. v. Potter et al. (2005), 237 N.S.R.(2d) 48; 754 A.P.R. 48; 2005 NSSC 264, refd to. [para. 88].

Crewe v. Crewe (2008), 273 N.S.R.(2d) 140; 872 A.P.R. 140; 2008 NSCA 115, refd to. [para. 88].

Statutes Noticed:

Rules of Court (N.S.), rule 13.04(1) [para. 27].

Counsel:

Harry Thurlow and Andrea Isabelle, for the plaintiff;

Michael D. Sutton, for the defendants Michael D. Sutton and M.D. Sutton Holdings Ltd.

This motion for summary judgment on evidence was filed on February 4, 2014, and heard on May 20, 2014, in Halifax, Nova Scotia, before Rosinski, J., of the Nova Scotia Supreme Court, who delivered the following decision, dated July 10, 2014.